In honor of National Financial Literacy Month, CNBC will be featuring stories focused on helping individuals manage, grow, and protect their finances. One such story highlights the journey of a man named Adcock, who achieved financial security at the age of 35 when he retired with approximately $900,000 in savings. Market gains then pushed his total wealth over $1 million, providing him with a sense of freedom to live life on his own terms without depending on a paycheck. Adcock and his wife enjoyed three years of travel in an RV, living modestly and spending less than they do now, marking the first time Adcock truly felt financially secure.
Adcock emphasizes that achieving financial security is not solely dependent on having a high salary, but also involves saving and investing wisely. While a higher income certainly helps, it is crucial to live below your means and save a significant portion of your earnings. In 2014, when Adcock and his wife were earning a combined $220,000 annually, they saved around 70% of their income and invested aggressively in retirement and brokerage accounts. This high savings rate allowed them to quickly accumulate wealth and ultimately reach a point where they no longer needed to work for the rest of their lives.
One of the key steps in building financial security is to start by establishing an emergency fund to cover unexpected expenses. A large number of Americans do not have enough savings to handle a $1,000 emergency, highlighting the importance of having a financial safety net in place. Financial experts typically recommend saving three to six months’ worth of living expenses for emergencies, with the goal of eventually reaching a point where you could live off your savings for one, five, or even ten years. This approach allows you to view money not just as a sum to accumulate, but as a tool to support the things you value in life.
For individuals aiming for early retirement, the ultimate objective is to create a substantial investment portfolio that can sustain withdrawals indefinitely. Even for those like Adcock, who continue to generate income from various projects, achieving the highest level of financial security means having the flexibility to work on your own terms rather than being tied to a traditional job. While Adcock may not consider himself fully retired in the traditional sense, he and his wife have achieved financial independence and security, allowing them to pursue endeavors and interests that spark their curiosity and passion.
To supplement your primary income, CNBC offers an online course on how to earn passive income, covering common streams of passive income, tips for getting started, and real-life success stories. By signing up for this course and subscribing to CNBC Make It’s newsletter, you can gain valuable insights and strategies for achieving success in your professional, financial, and personal life. Take control of your finances, save diligently, invest wisely, and work towards achieving financial security that enables you to live the life you desire.
